The Not So Wild Wild West

The western expansion of the United States has a fairly well accepted narrative: namely that it was “wild” and more violent than life on the east coast during the 19th century. This, like many other legends and folklore, is completely untrue. If you look at the data, the west was less violent than the settled east coast during the same time period. Yes, there were fights with Indians and some hangings, but not to the extent that most people imagine. In fact, the violence people imagine was a result of the government’s expansion into the western territories. When government moved in and started throwing its weight around, violence escalated and intensified. Is it any wonder why? Indians did not take kindly to having their land stolen by the federal government. And settlers did not take kindly to having their institutions messed with. After government arrived, rent-seeking was the norm.
Western expansion serves as a case study of the emergence of law and order in a geographic region untouched by government. Do property rights, law, order, and peace spontaneously emerge like our price system does? The clear answer to this question is yes, thanks to Terry Anderson and Peter Hill’s work.

So what’s the short of it? The short of the theory is quite simple: when a certain resource or good reaches a certain threshold of value, institutional entrepreneurs create property rights. The book is chock full of history and evidence of this happening over and over again as settlers expanded west: horses, water, land, crops, etc. Entrepreneurs figured out how to efficiently maximize a resource’s value by creating property rights with an adequate enforcement mechanism. They pre-contracted with others before herding cattle north in groups of 10 to 20 herders. They evaluated the water supply in the western states and came up with a variation on the old English water rights doctrine. They made efficient rules on how to claim land. Trade posts and supply chains were formed along well traveled routes north and west. And the list goes on. All of these market creations happened without any formal backing of any formal government. It wasn’t until the U.S. government started impeding on property rights – both through expropriating Indian land and reconfiguring the institutions that made law and order so efficient – that violence and conflict arose in the west. As the settlers well understood, violence is a zero sum game. Trade is not. Therefore, when YOU bear the costs of violence, the optimal move is to trade (like settlers did with the Indians before government arrived). When you can offload the costs of violence onto others via taxation and regulation, violence becomes less costly and the incentive to trade lessens. Hence the government’s expansion west was the spark that ignited violence and conflict.

The only part of the book I took any issue with was a small part towards the end where the authors attempted to apply the same framework of the west to developing countries nowadays. Much of that was well done, except for the part about intellectual property. They made it seem like if developing third world countries could just create and enforce IP laws, they’d grow much faster and quickly become first world. I completely disagree. But my anti-IP law rants are for another post. All in all, Anderson and Hill’s work was thorough and quite convincing. They provided a ton of data, both empirical and anecdotal, to back their claims. And unlike Hayek and Mises, the writing was clear and at a generally consumable level. Give it a read, you won’t be disappointed.